Santos signs agreement with NSW Government for Narrabri CSG project

Oil and gas company Santos has signed a Memorandum of Understanding with the New South Wales Government for a proposed coal seam gas project at Narrabri.

The MoU will ensure that the Narrabri Gas Project, in the state's north-west, will be assessed within certain time frames.

It is now designated a Strategic Energy Project which the government hopes will entice investors to the project, which is yet to achieve a final investment decision.

NSW Energy and Resources Minister Anthony Roberts says the project will be subject to the highest standard of independent environmental assessment.

He says if it's approved, it will help meet a predicted shortfall of gas for NSW by 2015.

Santos will have to provide baseline monitoring of water levels and quality and a risk assessment of the potential impacts of the project.

Santos vice-president James Baulderstone says the MoU doesn't automatically mean the project will be approved.

He says the the development will still have to meet the government's environmental standards.

"The community must trust the government processes and I think it should have faith in a company such as Santos, which has been producing gas for 60 years.

"The government has very strong regulations and it's important that we combine the two to ensure gas is delivered at the right time."

Farmers who are opposed to the project say they're devastated that the MoU has been signed.

Phil Laird, from action group The Maules Creek Community Council, believes the project's approval is now guaranteed.

"A lot of the farmers will be gutted and to me this would give all the signals to the market and everyone else that it's a done deal.

"I don't think the assurances that it's going to go through some sort of planning processes in a timely manner means anything.

"I wouldn't mind betting that they're making investment decisions on the back of this now."

But Narrabri businessman and Santos waste contractor, Ron Campbell, says the gas industry is integral to his community.

"The support for Santos is huge in the town, amongst all levels of the town," said Mr Campbell.

"These companies have brought in professional businesses employing local people.

"I couldn't imagine where we'd be if we didn't have Santos."

Minister for western NSW, Kevin Humphries says farmers should not feel threatened by the MoU as the water quality issues and the acquifer issues will be dealt with by the state's chief scientist Mary O'Kane.

He says farmers will also have the right to refuse to participate with miners if they wish.

"There will be some exceptions to this regarding access provided to companies for exploration and for the building of pipelines across or through farmers land.

"But the general principle is that farmers have the right to say no.

"However, I do know of many farmers being supportive of mining companies and I know of 45 agreements that have been signed by farmers in this region that give mining companies land access rights."